Miscellaneous Facts (MFs)

Retrospectively, Reagan's election to the Presidency was clearly the turning point. That's when the upper clases started to do radically better, and the working classes started to go downhill. There's lots of public and private statistics to support that point. For example, once upon a time American CEOs only made 20-30 times more than the average worker. Now the pay ratio is somewhere around 400-600 times, and going up.

I was also propelled into this reflection by an article in Business Week (subscription required), "The New Face of Medicaid," 2/21/2005. BW complains that Medicaid now costs $300 billion annually and is breaking the bank. About $200 billion is spent on approx 13 million elderly and disabled adults, and another $100 billion on 40 million young adults and children.

Now, time for another fact.: You cannot get Medicaid (in California, MediCal) unless you are desperately poor. You must have less than $2,000 in total liquid assets, excluding your house and car. Under some circumstances, you could be required to sell your car and even your house to qualify for Medicaid. In reality, especially among the elderly and disabled, the house probably disappeared long before the recipient qualified for Medicaid. In addition to owning little more than the clothes on your back, you must have super-low income as well. Even receipt of as much as the poverty-line income can disqualify you from Medicaid.

Almost all adults - overwhelmingly women - in nursing homes at the end of their lives are on Medicaid. To get there under Medicaid, you have to have just about nothing left. You are generously allowed around $40 "spending money" per month. The presumption is nursing home residents don't need to pay for clothes or any other personal thing.

Have you been to a nursing home lately? I haven't, so my numbers may be a bit off. But, I have spent time with people in the nursing home and hospital terminus. So, I don't think my picture is that far off.

Now, back to my purpose. How come there are 53 million people who have essentially nothing? How come there are some 44 million medically uninsured Americans? Is it somehow erroneous to mention that people with good incomes can afford to pay those medical costs themselves or buy health insurance. Once upon a time - in my living memory, during the early 1970s - some 2/3 of all working families were covered by employer health insurance. Now that fraction is less than 1/3. What happened to those benefits?

These questions bear on the raging Social Security and Medicare debates. According to a presentation by the Concord Coalition earlier today, one of the problems in funding retirement is the lack of savings. That there is a lack of savings seems agreed by a broad spectrum of politicians, pundits and economists. The savings deficit is usually attributed to the spendthrift ways of Americans. Very few people ask why are real American incomes so low? If American workers made more money, maybe they would save more; after all, wealthy Americans do save and invest on a grand scale.

Conservatives want Americans to pay for their retirement and their eventual nursing home care as well. That's why companies like GE constantly dun us with notices about the importance of the long-term care insurance they sell. That's a great idea, except that scarcely anyone can afford it. Why not? Well, most people just don't make enough money.

I hope the reader will recall that I have been writing about productivity lately. That's because an important part of the solution to the Social Security shortfall and similar problems is a regular increase in productivity. The assumption is simply that a sufficiently productive worker can afford to support him/herself and a family and save something for the future. But, behind this there is also the assumption that the fruits of productivity are distributed fairly to workers; i.e., there is an equitable distribution of the product.

I think we are doing just fine on the productivity front. There really is no reason why everyone's usual needs should not be provided., now and in the future. There is no Social Security shortfall, or Medicare crisis, due to lack of productivity. What is lacking is fair distribution. The point is that, since 1980, conservatives have been in control of the country. They have seen to it that the product is redistributed to the wealthy, not the poor. This has created a progressively worse distribution of income and wealth. The present gap between rich and poor is greater in the United States than any other country of the world.

The vast majority of the Wall St Journal's readers make more than $100,000 annually. They don't care about the average employee's 0.2% real pay cut last month; to the contrary, from their point of view that was probably a good thing. Lower real wages means a lower cost of doing business. It is an increase in productivity, which makes the WSJ's reader stocks go up. Some manager somewhere will get a bonus in recognition of a job well done.

It was not always thus, and it need not be so.